L1 Global Long Short Fund has raised approximately A$100.9 million from institutional investors, with strong demand allowing L1 Group to place its A$70.1 million entitlement with new shareholders. Retail investors now face a 1-for-2 offer at A$1.76 a share, with up to A$381.7 million still available.
- A$100.9 million raised through institutional entitlement and shortfall offers
- L1 Group’s approximately A$70.1 million entitlement placed with new shareholders
- Mark Landau and Raphael Lamm took up their full entitlements
- Retail offer opens on 13 October at A$1.76 per share
- Non-underwritten offer leaves final proceeds dependent on retail participation
Institutional demand fills A$100.9 million tranche
L1 Global Long Short Fund Limited (ASX:GLS) has secured approximately A$100.9 million from institutional investors, giving the capital raising a strong opening before retail shareholders get their turn. The money was raised at A$1.76 per new share, with approximately A$30.8 million coming through the institutional entitlement offer and A$70.1 million through the institutional shortfall offer.
The result completes the institutional leg of GLS’s 1-for-2 accelerated non-renounceable entitlement offer. It also confirms the early demand signalled in the company’s placeholder announcement, which targeted up to approximately A$482.7 million at the same issue price. The offer price was approximately equal to GLS’s unaudited pre-tax net tangible asset value per share as at 2 October, before deferred tax on unrealised portfolio gains and losses.
L1 Group makes room for new shareholders
The most notable feature of the institutional bookbuild was L1 Group Limited’s decision not to take up its approximately A$70.1 million entitlement directly. Instead, that entitlement was placed with new shareholders through the institutional shortfall offer, with L1 Group’s entitlement ultimately taken up in full by the market.
That structure means the parent group has not abandoned its potential participation altogether. L1 Group may still subscribe for up to A$70.1 million of any shortfall left after the retail entitlement offer, although the final allocation will depend on shareholder take-up and the company’s decisions under the offer terms.
Founders commit as retail offer approaches
Mark Landau and Raphael Lamm, the founders and co-chief investment officers of GLS investment manager L1 Capital, each took up their full entitlements through personal investment vehicles. The company said their participation, alongside support from existing and new institutions, reflected continued conviction in the L1 Global Long Short Strategy.
Eligible Australian and New Zealand retail shareholders can subscribe for one new share for every two held at the 7 October record date, paying A$1.76 per share. The retail entitlement offer is expected to raise up to approximately A$381.7 million and opens on 13 October, with the company reporting that binding wholesale bids for any retail shortfall already exceeded that amount. Those bids remain subject to scale-back and do not guarantee that the full retail shortfall will be allocated.
Non-underwritten structure leaves final raise unresolved
GLS’s entitlement offer is not underwritten. Shareholders who do not participate in the non-renounceable offer cannot sell their entitlements or receive value for them, leaving their percentage holdings exposed to dilution if new shares are issued to other investors.
The institutional shares are expected to begin trading on 15 October, while the retail offer is scheduled to close on 23 October and its new shares to commence trading on 2 November. Those dates are indicative and may change. The sharper question is how much of the remaining retail capacity shareholders take up, and how much ultimately moves to wholesale investors under the shortfall process.
Bottom Line?
The institutional bookbuild has reduced execution uncertainty, but GLS will not know the final size and shareholder mix of the raising until the retail offer closes.
Questions in the middle?
- How much of the A$381.7 million retail entitlement will existing shareholders take up?
- Will L1 Group need to subscribe for any remaining retail shortfall?
- How will the enlarged share base affect GLS’s future net tangible asset backing and distributions?